A Plea for Simpler Electricity Tariffs

This paper asserts that electric rate structures in the United States are often so confusing that even large commercial customers (and their energy consultants) frequently are not aware of their cost implications. This results in an under-investment in energy conservation and load management approaches. Several case studies are presented and various rate structures are discussed. An argument is made for simpler tariffs, or at least a simplified declaration (in tariffs and/or bills) to electricity customers of what their marginal costs are, such that conservation efforts can be properly valued and designed.